GIFT   OF 


GIFT 
JUN    8    ! 


HIGH  FINANCE 


OTTO  H.  KAHN 


HIGH  FINANCE 

OTTO  H.  KAHN 


ADDRESS  DELIVERED  AT  ANNUAL  DINNER 

AMERICAN   NEWSPAPER  PUBLISHERS  ASSOCIATION 

APRIL  27,  1916,  WALDORF-ASTORIA,  NEW  YOBK 


HIGH  FINANCE 


THE  term  "high  finance"  derives 
its  origin  from  the  French  "haute 
finance,"  which  in  France  as  else- 
where in  Europe  designates  the  most 
eminently  respectable,  the  most 
unqualifiedly  trustworthy  amongst 
financial  houses. 

Why  has  that  term,  in  becoming 
acclimated  in  this  country,  gradually 
come  to  suggest  a  rather  different 
meaning? 

Why  does  there  exist  in  the  United 
States,  alone  amongst  the  great 
nations,  a  widespread  attitude  of 

[3] 

340925 


HIGH  FINANCE 

suspicion,  indeed  in  many  quarters, 
of  virtual  hostility,  toward  the  finan- 
cial community  and  especially  toward 
the  financial  activities  which  focus  in 
New  York,  the  country's  financial 
capital? 

There  are  a  number  of  causes  and 
for  some  of  them  finance  cannot  be 
absolved  from  responsibility.  But  the 
primary  underlying  and  continuing 
cause  is  lack  of  clear  appreciation 
of  what  finance  means  and  stands  for 
and  is  needed  for.  And  from  this 
there  has  sprung  a  veritable  host  of 
misconceptions,  prejudices,  supersti- 
tions and  catch-phrases. 

Never  was  it  of  more  importance 
than  in  the  present  emergency  that 
the  people  should  have  a  clear  and 
correct  understanding  of  the  mean- 
ing and  significance  of  finance,  indeed 

[4] 


HIGH  FINANCE 

of  "high  finance,"  and  that  they 
should  approach  the  subject  calmly 
and  dispassionately  and  with  un- 
troubled vision,  for  when  the  Euro- 
pean war  is  over  and  the  period  of 
reconstruction  sets  in,  one  of  the 
most  vital  questions  of  the  day  will 
be  that  of  finance  and  financing. 

The  handling  and  adjustment  of 
that  question,  although  it  primarily 
concerns  Europe,  cannot  fail  to  affect 
America  favorably  or  unfavorably, 
according  to  the  wisdom  or  lack  of 
wisdom  of  our  own  attitude  and 
actions. 

A  great  many  things  are  being  and 
have  been  charged  in  the  popular 
view  against  finance,  with  which 
finance,  properly  understood,  has 
nothing  to  do. 

The  possession  of  wealth  does  not 

[5] 


HIGH  FINANCE 

make  a  man  a  financier — just  as  little 
as  the  possession  of  a  chest  of  tools 
makes  a  man  a  carpenter. 

Finance  does  not  mean  specula- 
tion— although  speculation  when  it 
does  not  degenerate  into  mere 
gambling  has  a  proper  and  legitimate 
place  in  the  scheme  of  things  eco- 
nomic. Finance  most  emphatically 
does  not  mean  fleecing  the  public,  nor 
fattening  parasitically  off  the  indus- 
try and  commerce  of  the  country. 

Finance  cannot  properly  be  held 
responsible  for  the  exploits,  good, 
bad  or  indifferent,  of  the  man  who, 
having  made  money  at  manufactur- 
ing, or  mining,  or  in  other  commercial 
pursuits,  blows  into  town,  either 
physically  or  by  telephone  or  tele- 
graph, and  goes  on  a  financial  spree, 
more  or  less  prolonged. 

[6] 


HIGH  FINANCE 

Finance  means  constructive  work. 
It  means  mobilizing  and  organizing 
the  wealth  of  the  country  so  that  the 
scattered  monetary  resources  of  the 
individuals  may  be  united  and  guided 
into  a  mighty  current  of  fruitful 
co-operation  —  a  hundredfold,  nay 
ten-thousandfold  as  potent  as  they 
would  or  could  be  in  individual 
hands. 

Finance  means  promoting  and 
facilitating  the  country's  trade  at 
home  and  abroad,  creating  new 
wealth,  making  new  jobs  for 
workmen. 

It  means  continuous  study  of  the 
conditions  prevailing  throughout  the 
world.  It  means  daring  and  imag- 
ination combined  with  care  and  fore- 
sight and  integrity,  and  hard,  wearing 
work — much  of  it  not  compensated, 

[7] 


HIGH  FINANCE 

because  of  every  ten  propositions 
submitted  to  the  scrutiny  or  evolved 
by  the  brain  of  the  financier  who 
is  duly  careful  of  his  reputation  and 
conscious  of  his  responsibility  to  the 
public,  it  is  safe  to  say  that  not 
more  than  three  materialize. 

For  the  financial  offspring  of  which 
he  acknowledges  parentage,  or  merely 
godfather  ship ,  he  is  held  responsible  by 
the  public  for  better  or  for  worse,  and 
will  continue  to  be  held  responsible 
notwithstanding  certain  ill-advised 
provisions  of  the  recently  enacted 
Clayton  Anti-Trust  Act  which  are 
bound  to  make  it  more  difficult  for 
him  to  discharge  that  responsibility. 

Amongst  other  functions  and  duties, 
it  is  "up  to  him"  to  look  ahead,  so 
that  such  offspring  may  always  be 
provided  with  nouriture,  i.  e.,  with 

[8] 


HIGH  FINANCE 

funds  to  conduct  their  business.  If 
for  one  reason  or  another  they  find 
themselves  short  of  means  in  difficult 
times,  it  is  his  task  and  care  to  find 
ways  and  means  to  obtain  what  is 
needed,  sometimes  at  great  financial 
risk  to  himself. 

It  is  perhaps  significant  that  almost 
all  the  railroad  companies  now  in 
receivers'  hands  were  among  those 
for  whose  financial  policy  no  one 
amongst  the  leading  banking  houses 
had  a  continuous  and  recognized 
responsibility,  though  I  must  not  be 
understood  as  meaning  to  suggest 
that  there  were  not  other  contribu- 
tory causes  for  such  receivership, 
involving  responsibility  and  blame, 
amongst  others,  also  on  members  of 
the  banking  fraternity. 


[9] 


HIGH  FINANCE 


II 

WITHOUT  going  into  shades  of 
encyclopedic  meaning,  I  would 
define,  for  the  purpose  of  this  discus- 
sion, a  financier  as  a  man  who  has 
some  recognized  relation  and  re- 
sponsibility toward  the  larger  mone- 
tary affairs  of  the  public,  either  by 
administering  deposits  and  loaning 
funds  or  by  being  a  wholesale  or 
retail  distributor  of  securities. 
To  all  such  the  confidence  of  the 

[10] 


HIGH  FINANCE 

financial  community,  which  naturally 
knows  them  best,  and  of  the  investing 
public  is  absolutely  vital.  Without 
it,  they  simply  cannot  live. 

To  provide  for  the  thousands  of 
millions  of  dollars  annually  needed  by 
our  railroads  and  other  industries, 
would  vastly  overtax  the  resources  of 
all  the  greatest  financial  houses  and 
groups  taken  together,  and  therefore 
the  financier  or  group  of  financiers 
undertaking  such  transactions  must 
depend  in  the  first  instance  upon  the 
co-operation  of  the  financial  com- 
munity at  large.  For  this  purpose 
such  houses  or  groups  associate  with 
themselves  for  every  transaction  of 
considerable  size,  a  large  number  of 
other  houses,  thus  forming  so-called 
syndicates. 

But  even  the  resources  thus 
[11] 


HIGH  FINANCE 

combined  of  the  entire  financial  com- 
munity would  fall  far  short  of  being 
sufficient  to  supply  the  needed  funds 
for  more  than  a  very  limited  time, 
and  appeal  must  therefore  be  made 
to  the  absorbing  power  of  the  country 
as  a  whole  represented  by  the 
ultimate  investor. 

Now,  let  a  financial  house,  either 
through  lack  of  a  high  standard  of 
integrity  in  dealing  with  the  public, 
or  through  lack  of  thoroughness  and 
care,  or  through  bad  judgment,  for- 
feit the  confidence  of  its  neighbors  or 
of  the  investing  public,  and  the  very 
roots  of  its  being  are  cut. 

I  do  not  mean  to  claim  that  high 
finance  has  not  in  some  instances 
strayed  from  the  highest  standard, 
that  it  has  not  made  mistakes,  that 
it  has  not  at  times  yielded  to  tempta- 

[12] 


HIGH  FINANCE 

tion — and  the  temptations  which 
beset  its  path  are  indeed  many — that 
there  have  not  been  some  occurrences 
which  every  right  thinking  man  must 
deplore  and  condemn. 

But  I  do  say  and  claim  that  prac- 
tically all  such  instances  have 
occurred  during  what  may  be  termed 
the  country's  industrial  and  economic 
pioneer  period,  a  period  of  vast  and 
unparalleled  concentration  of 
national  energy  and  effort  upon  mate- 
rial achievement,  of  tremendous  and 
turbulent  surging  towards  tangible 
accomplishment,  of  sheer  individual- 
ism, a  period  of  lax  enforcement  of 
the  laws  by  those  in  authority,  of 
uncertainty  regarding  the  meaning 
of  the  statutes  relating  to  business 
and,  consequently,  of  impatience  at 
restraint  and  a  weakened  sense  of  the 

[13] 


HIGH  FINANCE 

fear,  respect  and  obedience  due  to 
the  law. 

In  the  mighty  and  blinding  rush  of 
that  whirlwind  of  enterprise  and 
achievement  things  were  done — gen- 
erally without  any  attempt  at  con- 
cealment, in  the  open  light  of  day  for 
everyone  to  behold — which  would 
not  accord  with  our  present  ethical 
and  legal  standards,  and  public 
opinion  permitted  them  to  be  done. 

To  quote  one  instance  out  of  many : 
Campaign  contributions  by  corpora- 
tions were  a  recognized  and  almost 
universal  practice.  The  acceptance 
of  such  contributions  did  not  shock 
the  most  tender  political  conscience. 
Now  they  are  rightly  forbidden,  and 
what  up  to  a  few  short  years  ago  was 
not  only  not  prohibited  but  sanctioned 

[14] 


HIGH  FINANCE 

by  the  custom  of  a  generation  and 
more,  is  now  made  and  considered 
a  crime. 

Then  suddenly  a  mirror  was  held 
up  by  influences  sufficiently  powerful 
to  cause  the  mad  race  to  halt  for  a 
moment  and  to  compel  the  concen- 
trated attention  of  all  the  people. 
And  that  mirror  clearly  showed, 
perhaps  it  even  magnified,  the  blem- 
ishes on  that  which  it  reflected. 

With  their  recognition  came  stern 
insistence  upon  change,  and  very 
quickly  the  realization  of  that  de- 
mand. That  is  the  normal  process  of 
civilization  in  its  march  forward 
and  upward. 

And  I  claim  that  Finance  has  been 
as  quick  and  willing  as  any  other 
element  in  the  community  to  discern 
the  moral  obligations  of  the  new  era 

[15] 


HIGH  FINANCE 

brought  about  within  the  last  ten 
years  and  to  align  itself  on  their  side. 

As  soon  as  the  meaning  of  the  laws 
under  which  business  was  to  be  con- 
ducted had  come  to  be  reasonably 
defined,  as  soon  as  it  became  appar- 
ent that  the  latitude  tacitly  per- 
mitted during  the  pioneer  period 
must  end,  finance  fell  into  line  with 
the  new  spirit  and  has  kept  in  line. 

I  say  this  notwithstanding  the 
various  investigations  that  have  since 
taken  place,  nearly  all  of  which  have 
dealt  with  incidents  that  occurred 
several  years  ago. 

And  in  this  connection  I  would 
add  that  it  is  difficult  to  imagine 
anything  more  unfair  than  the  theory 
and  method  of  these  investigations 
as  all  too  frequently  conducted. 

The  appeal  all  too  often  is  to  the 

[16] 


HIGH  FINANCE 

gallery,  hungry  for  sensation;  the 
method — to  wash  as  much  soiled 
linen  as  possible  in  public  (even,  if 
necessary,  to  make  clean  linen  ap- 
pear soiled),  and  to  use  a  profusion 
of  soap  and  water  quite  out  of  pro- 
portion to  the  actual  cleaning  to  be 
done. 

To  innocent  transactions  it  is 
sought  to  give  a  sinister  meaning; 
what  lapses,  faults  or  wrongs  may  be 
discovered  are  given  exaggerated 
portent  and  significance. 

The  Chairman  is  out  to  make  a 
record,  or  to  fortify  a  preconceived 
notion  or  accomplish  a  preconceived 
purpose. 

Counsel  is  out  to  make  a  record. 
The  principal  witnesses  are  placed  in 
the  position  of  defendants  at  the  bar 
without  being  protected  by  any  of 

[17] 


HIGH  FINANCE 

the  safeguards  which  are  thrown 
around  defendants  in  a  court  of  law. 

To  complete  the  picture,  I  must — 
saving  your  presence — add  this  other 
patch  of  black :  The  reporting  is  very 
frequently,  if  not  generally,  done  by 
young  men  not  very  familiar  with 
matters  of  finance  and  in  search  of 
incident  and  of  high  light  rather  than 
of  the  neutral  tints  of  a  sober  and 
even  record;  and  the  job  of  head- 
lining seems  somehow  to  be  entrusted 
always  to  a  mortal  enemy  of  the 
particular  witnesses  of  each  session, 
selected  with  great  care  for  his 
ingenuity  in  compressing  the  maxi- 
mum of  poison  gases  into  a  few 
explosive  words. 

It  may  all  be  legitimate,  according 
to  political  standards,  but  it  is  not 
justice,  and  what  of  benefit  is 

[18] 


HIGH  FINANCE 

accomplished  could  equally  well  be 
obtained,  whatever  of  guilt  is  to  be 
revealed  could  equally  well  and  prob- 
ably better  be  disclosed,  without 
resorting  to  inflammatory  appeal  and 
without,  by  assault  or  innuendo, 
recklessly  and  often  indiscriminately 
besmirching  reputations  and  hurting 
before  the  whole  world  the  good 
name  of  American  business. 

I  do  not  know  of  any  similar 
method  and  practice  and  spirit  of 
conducting  investigations  in  any 
other  country. 

By  all  means  let  us  delve  deep 
wherever  we  have  reason  to  suspect 
that  guilt  lies  buried.  Let  us  take 
short  cuts  to  arrive  at  the  truth,  but 
let  us  be  sure  that  it  is  the  truth  that 
we  shall  meet  at  the  end  of  our  road, 
and  not  a  mongrel  thing  wearing 

[19] 


HIGH  FINANCE 

some  of  the  garments  of  truth,  but 
some  others,  too,  belonging  to  that 
trinity  of  unlovely  sisters,  passion, 
prejudice  and  self-seeking. 


[20] 


HIGH  FINANCE 


III 


IN  many  ways,  in  many  instances, 
wrong  impressions  about  finance 
have  been  given  to  the  public,  some- 
times from  ignorance,  sometimes 
with  malice  aforethought,  sometimes 
for  political  purposes. 

The  fact  is  that  the  men  in  charge 
of  our  financial  affairs  are,  and  to  be 
successful,  must  be  every  whit  as 
honorable,  as  patriotic,  as  right 
thinking,  as  anxious  for  the  good 
opinions  of  their  fellowmen  as  those 
in  other  walks  of  life. 

[21] 


HIGH  FINANCE 

In  every  time  of  crisis  or  difficulty 
in  the  nation's  history,  from  the  War 
of  Independence  to  the  present 
European  War,  financiers  have  given 
striking  proof  of  their  devotion  of 
the  public  weal,  and  they  may  be 
depended  upon  to  do  so  whenever 
and  howsoever  called  upon. 

American  finance  has  rendered 
immense  services  to  the  country,  and 
its  record — considering  especially  the 
gross  faultiness  of  the  laws  under 
which  it  had  to  work  before  the 
passage  of  the  Federal  Reserve  Act, 
and  in  some  respects  still  has  to 
work — compares  by  no  means 
unfavorably  with  that  of  finance  in 
Europe. 

There  has  been  no  gambling  frenzy 
in  the  financial  markets  of  America 
within  the  memory  of  this  generation 

[22] 


HIGH  FINANCE 

equalling  the  recklessness  and  mag- 
nitude of  England's  South  African 
mining  craze  with  its  record  of 
questionable  episodes,  some  of  them 
involving  great  names;  no  scandal 
comparable  to  the  Panama  scandal, 
the  copper  collapse,  the  Cronier 
failure,  and  similar  events  in  France; 
no  bank  failure  as  disgraceful  and 
ruinous  as  that  of  the  Leipziger 
Bank  and  two  or  three  others  within 
the  last  dozen  years  in  Germany. 
No  combination  exists  in  this  country 
remotely  approaching  the  monopo- 
listic control  exercised  by  several  of 
the  so-called  cartels  and  syndicates 
of  Europe. 

One  of  the  reasons  why  finance  so 
frequently  has  been  the  target  for 
popular  attack  is  that  it  deals  with 
the  tangible  expression  of  wealth, 

[23] 


HIGH  FINANCE 

and  in  the  popular  mind  pre- 
eminently personifies  wealth,  and  is 
widely  looked  upon  as  an  easy  way  to 
acquire  wealth  without  adequate 
service. 

Yet  it  is  a  fact  that  there  are  very 
few  financial  houses  of  great  wealth. 
All  of  the  very  greatest  fortunes  of 
the  country,  and  in  fact  most  of  the 
great  fortunes,  have  been  made,  not 
in  finance,  but  in  trade,  industries 
and  inventions. 

A  similar  exaggerated  view  pre- 
vails as  to  the  power  of  finance. 

It  is  true  there  have  been  men  in 
finance  from  time  to  time,  though 
very  rarely  indeed,  who  did  exercise 
exceedingly  great  power,  such  as,  in 
our  generation,  the  late  J.  P.  Morgan 
and  E.  H.  Harriman. 

But    the    power    of    those    men 

[24] 


HIGH  FINANCE 

rested  not  in  their  being  financiers, 
but  in  the  compelling  force  of  their 
unique  personalities.  They  were 
born  leaders  of  men  and  they  would 
have  been  acknowledged  leaders  and 
exercised  the  power  of  such  leader- 
ship in  whatever  walk  of  life  they 
might  have  selected  as  theirs. 

As  I  have  said  before,  the  capacity 
of  the  financier  is  dependent  upon  the 
confidence  of  the  financial  commun- 
ity and  the  investing  public,  just 
as  the  capacity  of  the  banks  is 
dependent  upon  the  confidence  of  the 
depositing  public.  Take  away  confi- 
dence and  what  remains  is  only  that 
limited  degree  of  power  or  influence 
which  mere  wealth  may  give. 

Confidence  cannot  be  compelled; 
it  cannot  be  bequeathed — or,  at 
most,  only  to  a  very  limited  extent. 

[25] 


HIGH  FINANCE 

It  is  and  always  is  bound  to  be 
voluntary  and  personal. 

I  know  of  no  other  centre  where 
the  label  counts  for  less,  where  the 
shine  and  potency  of  a  great  name  is 
more  quickly  rubbed  off  if  the  bearer 
does  not  prove  his  worth,  than  in  the 
great  mart  of  finance. 

Mere  wealth  indeed  can  be  be- 
queathed, but  the  power  of  mere 
wealth — to  paraphrase  a  famous 
dictum — has  decreased,  is  decreasing 
and  ought  to  be,  and  will  be,  further 
diminished. 


[26] 


HIGH  FINANCE 


IV 


WHAT,  then,  can  and  should 
finance  do  on  its  own  part  in 
order  to  gain  and  preserve  for  itself 
that  repute  and  status  with  the  pub- 
lic to  which  it  is  entitled,  and  which 
in  the  interest  of  the  country,  as  well 
as  itself,  it  ought  to  have? 

1.     Conform  to  Public  Opinion 

It  must  not  only  do  right,  but  it 
must  also  be  particularly  careful  con- 
cerning the  appearance  of  its  actions. 

[27] 


HIGH  FINANCE 

Finance  should  "omit  no  word  or 
deed"  to  place  itself  in  the  right 
light  before  the  people. 

It  must  carefully  study  and  in  good 
faith  conform  to  public  opinion. 

2.     Publicity 

One  of  the  characteristics  of  finance 
heretofore  has  been  the  cult  of 
silence,  some  of  its  rites  have  been 
almost  those  of  an  occult  science. 

To  meet  attacks  with  dignified 
silence,  to  maintain  an  austere  de- 
meanor, to  cultivate  an  etiquette  of 
reticence,  has  been  one  of  its  tradi- 
tions. 

Nothing  could  have  been  more 
calculated  to  irritate  democracy, 
which  dislikes  and  suspects  secrecy 
and  resents  aloofness. 

[28] 


HIGH  FINANCE 

And  the  instinct  of  democracy  is 
right. 

Men  occupying  conspicuous  and 
leading  places  in  finance  as  in 
every  other  calling  touching  the 
people's  interests,  are  legitimate 
objects  for  public  scrutiny  in  the 
exercise  of  their  functions. 

If  opportunity  for  such  scrutiny  is 
denied,  if  the  people's  legitimate 
desire  for  information  is  met  with 
silence,  secrecy,  impatience  and  re- 
sentment, the  public  mind  very 
natually  becomes  infected  with  sus- 
picion and  lends  a  willing  ear  to  all 
sorts  of  gossip  and  rumors. 

The  people  properly  and  justly 
insist  that  the  same  'Tierce  light  that 
beats  upon  a  throne"  should  also 
beat  upon  the  high  places  of  finance 
and  commerce. 

[29] 


HIGH  FINANCE 

It  is  for  those  occupying  such 
places  to  show  cause  why  they  should 
be  considered  fit  persons  to  be  en- 
trusted with  them,  the  test  being  not 
merely  ability,  but  just  as  much,  if 
not  more,  character,  self-restraint, 
fair-mindedness  and  due  sense  of 
duty  towards  the  public. 

Finance,  instead  of  avoiding  pub- 
licity in  all  of  its  aspects,  should 
welcome  it  and  seek  it.  Publicity 
won't  hurt  its  dignity.  A  dignity 
which  can  be  preserved  only  by 
seclusion,  which  cannot  hold  its  own 
in  the  market  place,  is  neither  merited 
nor  worth  having. 

We  must  more  and  more  get  out  of 
the  seclusion  of  our  offices,  out  into 
the  rough  and  tumble  of  democracy, 
out — to  get  to  know  the  people  and 
get  known  by  them. 

[30] 


HIGH  FINANCE 

Not  to  know  one  another  means 
but  too  frequently  to  misunderstand 
one  another,  and  there  is  no  more 
fruitful  source  of  trouble  than  to 
misunderstand  one  another's  kind 
and  ways  and  motives. 

3.     Service 

Every  man  who  by  eminent  suc- 
cess in  commerce  or  finance  raises 
himself  beyond  his  peers  is  in  the 
nature  of  things  more  or  less  of  an 
"irritant"  (I  use  the  word  in  its 
technical  meaning)  to  the  community. 

It  behooves  him,  therefore,  to 
make  his  position  as  little  jarring  as 
possible  upon  that  immense  majority 
whose  existence  is  spent  in  the  low- 
lands of  life  so  far  as  material  cir- 
cumstances are  concerned. 

[31] 


HIGH  FINANCE 

It  behooves  him  to  exercise  self- 
restraint  and  to  make  ample  allow- 
ance for  the  point  of  view  and  the 
feelings  of  others,  to  be  patient, 
helpful,  conciliatory. 

It  behooves  him  to  remember  that 
many  other  men  are  working,  and 
have  worked  all  their  lives,  with 
probably  as  much  effort  and  assidu- 
ous application,  as  much  self-abne- 
gation as  he,  but  have  not  succeeded 
in  raising  themselves  above  mediocre 
stations  in  life,  because  to  them  has 
not  been  granted  the  possession  of 
those  peculiar  gifts  which  beget 
conspicuous  success,  and  to  which, 
because  they  are  very  rare  and 
because  they  are  needed  for  the 
world's  work,  is  given  the  incentive 
of  liberal  reward. 

He  should  beware  of  that  insidious 
tendency  of  wealth  to  chill  and  iso- 

[32] 


HIGH  FINANCE 

late;  he  should  be  careful  not  to  let 
his  feelings,  aspirations  and  sympa- 
thies become  hardened  or  narrowed; 
lest  he  become  estranged  from  his 
fellow  men;  and  with  this  in  view  he 
should  not  only  be  approachable  but 
should  seek  and  welcome  contact 
with  the  work-a-day  world  so  as  to 
remain  part  and  parcel  of  it,  to 
maintain  and  prove  his  homogeneity 
with  his  fellow  men. 

And  he  should  never  forget  that 
the  advantages  and  powers  which  he 
enjoys  are  his  on  suff ranee,  so  to 
speak,  during  good  behavior,  the 
basis  of  their  conferment  being  the 
consideration  that  the  community 
wants  his  talents  and  his  work,  and 
grants  him  generous  compensation — 
including  the  privilege  of  passing 
it  on  to  his  children — in  order  to 

[33] 


HIGH  FINANCE 

stimulate  him  to  the  effort  of  using 
his  capacities,  since  it  is  in  the  public 
interest  that  they  should  be  used  to 
their  fullest  extent. 

He  should  never  forget  that  the 
social  edifice  in  which  he  occupies  so 
desirable  quarters,  has  been  erected 
by  human  hands,  the  result  of  infinite 
effort,  of  sacrifice  and  compromise, 
the  aim  being  the  greatest  good  of 
society;  and  that  if  that  aim  is  clearly 
shown  to  be  no  longer  served  by  the 
present  structure,  if  the  successful 
man  arrogates  to  himself  too  large  or 
too  choice  a  part,  if,  selfishly,  he 
crowds  out  others,  then,  what  human 
hands  have  built  up  by  the  patient 
work  of  many  centuries,  human  hands 
can  pull  down  in  one  hour  of  passion. 

The  undisturbed  possession  of  the 
material  rewards  now  given  to  sue- 

[34] 


HIGH  FINANCE 

cess,  because  success  presupposes 
service,  can  be  perpetuated  only  if 
its  beneficiaries  exercise  moderation, 
self-restraint,  and  consideration  for 
others  in  the  use  of  their  opportuni- 
ties, and  if  their  ability  is  exerted, 
not  merely  for  their  own  advantage, 
but  also  for  the  public  good  and  the 
weal  of  their  fellow  men. 

4.     Stand  up  for  Convictions 
and  Organize 

In  the  political  field,  the  ways  not 
only  of  finance  but  of  business  in 
general  have  been  often  unfortunate 
and  still  more  often  ineffective. 

It  is  in  conformity  with  the  nature 
of  things  that  the  average  man  of 
business,  responsible  not  only  for  his 
own  affairs,  but  often  trustee  for  the 

[35] 


HIGH  FINANCE 

welfare  of  others,  should  lean  towards 
that  which  has  withstood  the  acid 
test  of  experience  and  should  be 
somewhat  diffident  towards  experi- 
ment and  novel  theory. 

But,  making  full  allowance  for 
this  natural  and  proper  disposition, 
it  must,  I  believe,  be  admitted  that 
business,  and  especially  the  repre- 
sentatives of  large  business,  including 
high  finance,  have  too  often  failed  to 
recognize  in  time  the  need  and  to 
heed  the  call  for  changes  from 
methods  and  conceptions  which  had 
become  unsuitable  to  the  time  and 
out  of  keeping  with  rationally,  pro- 
gressive development;  that  they  have 
too  often  permitted  themselves  to  be 
guided  by  a  tendency  toward 
unyielding  or  at  any  rate  apparently 
unyielding  Bourbonism  instead  of 

[36] 


HIGH  FINANCE 

giving  timely  aid  in  a  constructive 
way  toward  realizing  just  and  wise 
modifications  of  the  existing  order  of 
things. 

Apart  from  these  considerations 
and  leaving  aside  practices  formerly 
not  uncommon,  but  which  modern 
laws  and  modern  standards  of  moral- 
ity have  made  impossible,  it  may  be 
said  generally  that  business  is  doing 
too  much  kicking  and  not  enough 
fighting. 

In  fact,  almost  the  only  instance 
which  I  can  remember  of  business 
asserting  itself  effectively  on  a  large 
scale  and  by  a  genuine  effort  for 
its  rights,  its  legitimate  interests 
and  its  convictions  was  during  the 
McKinley-Bryan  campaign,  in  saying 
which  I  do  not  mean  to  endorse  some 
of  the  methods  used  in  that  campaign. 

[37] 


HIGH  FINANCE 

And  yet,  the  latent  political  power 
of  business  is  enormous.  Wisely 
organized  for  proper  and  right 
purposes  it  would  be  irresistible. 
No  political  party  could  succeed 
against  it. 

If  this  country  is  to  take  full 
advantage  of  the  unparalleled  oppor- 
tunities which  the  developments  of 
the  last  two  years  have  opened  up  to 
it,  if,  in  the  severe  competition 
which  sooner  or  later  after  the  close 
of  the  war  is  bound  to  set  in  for  the 
world's  trade,  it  is  to  hold  its  own,  it 
must  not  only  not  be  hampered  by 
unwise  and  antiquated  laws,  as  it 
now  is,  in  certain  respects,  but  it 
must  be  intelligently  aided  and 
fostered  by  the  legislative  and 
administrative  powers. 

Business  in  the  leading  European 

[38] 


HIGH  FINANCE 

countries  has  been  backed  up  by  the 
respective  governments  in  the  past 
and  will  be  backed  up,  more  than 
ever,  in  the  post-bellum  period. 

Everywhere  else  through  the  civil- 
ized world  in  matters  of  national 
policies  as  they  affect  business,  the 
representatives  of  business  are  con- 
sulted and  listened  to  with  the 
respect  which  is  due  to  expert 
knowledge. 

It  is  only  in  America  that  the 
views  of  business  men  in  general  (as 
distinct  from  the  agitation  of  particu- 
lar business  men  or  organizations 
having  a  special  object  to  serve,  such 
as  on  the  occasion  of  tariff  making  in 
former  days)  are  ignored,  their  advice 
brushed  aside  or  even  resented,  their 
representatives  treated  as  inter- 
lopers. 

[39] 


HIGH  FINANCE 

It  is  only  in  America  that  the 
exigencies  of  politics  not  infrequently, 
I  might  almost  say  habitually,  are 
given  precedence  over  the  exigencies 
of  business. 

Objectionable  methods  and  prac- 
tices sometimes  resorted  to  in  the 
past  by  corporate  interests  in  en- 
deavoring to  influence  legislation  and 
public  opinion  have  been  abandoned 
beyond  resurrection. 

It  is  only  fair  that  with  them 
should  be  abandoned  the  habit  of 
politicians,  sometimes  politicians  in 
very  high  places,  to  denounce  as 
"lobbying"  every  organized  effort  of 
large  business  to  oppose  tendencies 
and  propositions  of  legislation  deemed 
by  it  inimical  to  the  best  interests  of 
business  and  of  the  country. 

It  is  only  fair  that  there  should  be 

[40] 


HIGH   FINANCE 

abandoned  the  habit  of  sneering  at 
and  suspecting  organized  efforts  by 
business  men  to  educate  public 
opinion  on  questions  affecting  busi- 
ness and  finance  as  improper  at- 
tempts to  '  'manufacture"  or  "accel- 
erate" public  opinion. 


[41] 


HIGH  FINANCE 


rriHE  people  are  fair-minded  and 
JL  when  fully  informed,  almost  in- 
varably  wise  and  right  in  their  judg- 
ment, which  cannot  always  be  said  of 
their  representatives. 

When  scolded,  browbeaten, 
maligned  and  harassed,  finance  may 
well  turn  upon  its  professional  fault- 
finders and  challenge  comparison. 

Finance  and  financiers  have  had 
no  mean  share  in  creating  organiza- 
tions and  institutions  in  this  country 
which  are  models  of  efficiency  and 

[42] 


HIGH  FINANCE 

which  men  from  all  quarters  of  the 
globe  come  here  to  study  and  to 
admire. 

It  is  the  critics  of  finance  and  busi- 
ness who — to  mention  but  a  few 
instances — have  given  to  the  army 
aeroplanes  that  are  grossly  defective, 
to  the  navy  submarines  that  are  in 
constant  trouble,  who  have  passed 
laws  which  have  driven  our  ships  off 
the  seas  in  the  world's  trade,  and 
other  laws  which  have  mainly  brought 
it  about  that  in  the  year  1915  less 
railroad  mileage  has  been  constructed 
in  the  United  States  than  within  any 
one  year  since  the  Civil  War. 

Just  as  Congress,  by  a  series  of 
laws,  has  imposed  burdens  and  costs 
upon  ships  operating  under  the 
American  flag  which  made  it  impos- 
sible for  capital  to  invest  in  American 

[43] 


HIGH  FINANCE 

ships  for  use  in  the  world's  trade  and 
earn  a  fair  return  in  normal  times,  so 
the  Federal  and  State  Legislatures, 
during  the  past  ten  years,  have 
imposed  upon  the  railroads  all  kinds 
of  exactions,  restrictions  and  in- 
creasing costs  which  have  had  the 
result  of  arresting  progress,  and  which 
threaten,  after  the  cessation  of  the 
present  period  of  abnormal  earnings, 
to  seriously  lame  that  vastly  impor- 
tant industry. 

Congress  has  done  little  to  indicate 
that  it  recognizes  the  urgency  and 
bigness  and  significance  of  the 
momentous  situation  which  con- 
fronts the  country. 

Nor  does  it  seem  inclined  to  pay 
serious  heed  to  the  views  of  business 
— and  by  that  I  do  not  mean  the 
views  of  business  "magnates,"  but 

[44] 


HIGH  FINANCE 

the  consensus  of  opinion  of  business 
men  in  general. 

Nor  does  past  experience  encourage 
us  to  believe  that  it  will  pay  such 
heed  unless  impelled  by  the  instinct 
of  self-preservation. 

Amongst  the  powers  for  which  our 
friends  of  both  political  parties  have 
a  wholesome  respect,  one  of  the  most 
potent  is  organization. 

Let  business  then  become  militant, 
not  to  secure  special  privileges — it 
does  not  want  any  and  does  not  need 
any — but  to  secure  due  regard  for  its 
views  and  its  rights  and  its  concep- 
tions as  to  what  measures  will  serve 
the  best  interests  of  the  country,  and 
what  measures  will  harm  and  jeop- 
ardize such  interests. 

Without  wishing  to  hold  up  the 
labor  unions  as  offering  a  model  for 

[45] 


HIGH  FINANCE 

the  spirit  which  should  actuate  us 
or  the  methods  we  should  follow— 
because  their  class-consciousness  and 
the  resulting  conduct  are  sometimes 
extreme  and  often  shortsighted,  I 
would  urge  upon  business  men  to 
cultivate  and  demonstrate  but  a 
little  of  that  cohesion  and  discipline 
and  subordination  of  self  in  the 
furtherance  of  the  common  cause, 
that  readiness  to  back  up  their  spokes- 
men, that  loyalty  to  their  calling 
and  to  one  another  which  working 
men  practice  and  demonstrate  daily, 
and  which  have  secured  for  their 
representatives  the  respect  and  fear 
of  political  parties. 

Let  business  men  range  themselves 
behind  their  spokesmen,  such  as  the 
United  States  Chamber  of 
Commerce  in  Washington  and  the 

[46] 


HIGH  FINANCE 

Chambers  of  Commerce  and  kindred 
associations  in  states  and  cities. 

Let  them  get  together  now  and  in 
the  future  through  a  properly  con- 
stituted permanent  organization,  and 
guided  by  practical  knowledge, 
broad  vision  and  patriotism,  agree 
upon  the  essentials  of  legislation 
affecting  affairs,  which  the  situation 
calls  for  from  time  to  time. 

Let  them  pledge  themselves  to  use 
their  legitimate  influence  and  their 
votes  to  realize  such  legislation  and 
to  oppose  actively  what  they  believe 
to  be  harmful  lawmaking. 

Let  them  strive,  patiently  and 
persistently,  to  gain  the  confidence  of 
the  people  for  their  methods  and 
their  aims. 

Let  them  meet  false  or  irresponsi- 
ble or  ignorant  assertion  with  plain 

[47] 


HIGH  FINANCE 

and  truthful  explanation.  Let  them 
take  their  case  directly  to  the  people 
— as  the  railroads  have  been  doing  of 
late  with  very  encouraging  results— 
and  inaugurate  a  campaign  of  educa- 
tion in  sound  economics,  sound 
finance  and  sound  national  business 
principles. 

Let  business  men  do  these  things, 
not  sporadically,  under  the  spur  of 
some  imminent  menace,  but  sys- 
tematically and  persistently. 

Let  them  be  mindful  that  just  as 
the  price  of  liberty  is  eternal  vigi- 
lance, so  eternal  effort  in  resisting 
fallacies  and  in  disseminating  true 
and  tested  doctrine  is  the  price  of 
right  lawmaking  in  a  democracy. 


[48] 


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